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Only Inaction Is Costly

I think there is no point in further debunking the myth that unrestricted greenhouse gas emissions leads to tolerable impacts (or even a more optimal world). Even the incredibly centrist Brookings Institution now recognizes that:

I think the more important question to address at the end of our discussion is the myth that action is costly. The IPCC’s Fourth Assessment Report, Working Group III, Summary for Policymakers concludes that stabilizing at 445-535 parts per million atmospheric concentration of CO2-equivalent would reduce average annual GDP growth rates by less than 0.12% per year. And that conclusion was signed off on by every member government, including China, Saudi Arabia, and the Bush administration. Note that this is CO2-equivalent.

That means stabilizing at 350-440 ppm of CO2 would reduce annual GDP less than 0.12% per year. Moreover, the report finds:

… in all analyzed world regions near-term health co-benefits from reduced air pollution as a result of actions to reduce GHG emissions can be substantial and may offset a substantial fraction of mitigation costs (high agreement, much evidence).

Including co-benefits other than health, such as increased energy security, and increased agricultural production and reduced pressure on natural ecosystems, due to decreased tropospheric ozone concentrations, would further enhance cost savings.

In fact, depending on how new low-carbon infrastructure is financed, the transition to a low-carbon economy may increase annual GDP growth in many countries.

The new analysis explains that “at a global, macroeconomic level, the costs of transitioning to a low-carbon economy are not, in an economic ‘welfare’ sense, all that daunting — even with currently known technologies.” Indeed, 70% of the total 2030 emissions reduction potential (below $60 a ton of CO2 equivalent) is “not dependent on new technology.”

The final reality is perhaps the most important:

The macroeconomic costs of this carbon revolution are likely to be manageable, being in the order of 0.6–1.4 percent of global GDP by 2030. To put this figure in perspective, if one were to view this spending as a form of insurance against potential damage due to climate change, it might be relevant to compare it to global spending on insurance, which was 3.3 percent of GDP in 2005. Borrowing could potentially finance many of the costs, thereby effectively limiting the impact on near-term GDP growth. In fact, depending on how new low-carbon infrastructure is financed, the transition to a low-carbon economy may increase annual GDP growth in many countries.

I am reprinting the cost curve here, because MGI have provided a much bigger version of it (click to enlarge):

Finally, the normally conservative International Energy Agency (IEA) also makes clear the cost of action is low in its recent report, “Energy Technology Perspectives, 2008″ (Exec. Sum. here). In all the scenarios the IEA considers,

… the estimated total undiscounted fuel cost savings for coal, oil and gas over the period to 2050 are greater than the additional investment required (valuing these fuels at Baseline prices). If we discount at 3%, fuel savings exceed additional investment needs in the ACT Map scenario [in which CO2 emissions in 2050 only return to 2005 levels].

In the BLUE Map (i.e. 450 ppm) scenario, where CO2 emissions in 2050 go to half of 2005 levels, we get “oil demand actually 27% less than today in 2050.”

The report warns of the high cost of inaction:

Unsustainable pressure on natural resources and on the environment is inevitable if energy demand is not de-coupled from economic growth and fossil fuel demand reduced.

The situation is getting worse… . [T]oday’s best estimates under our “business as usual” baseline scenario foreshadow a 70% increase in oil demand by 2050 and a 130% rise in CO2 emissions…. a rise in CO2 emissions of such magnitude could raise global average temperatures by 6°C (eventual stabilisation level), perhaps more. The consequences would be significant change in all aspects of life and irreversible change in the natural environment.

Those who not aggressively pushing for sharply and rapidly reversing our emissions trend with a goal of stabilizing at 450 ppm CO2 or less are simply inviting the self-destruction of modern civilization.

Also from This Issue

The prospect of potentially catastrophic global warming forces us to make decisions under extreme uncertainty. Yet, Jim Manzi writes, “Despite the rhetoric, the best available estimate of the damage we face from unconstrained global warming is not ‘global destruction,’ but is instead costs on the order of 3 percent of global GDP in a much wealthier world well over a hundred years from now.” Manzi explores how best to evaluate the costs of greenhouse gas abatement on the present-day economy when compared to the long-term benefits of avoiding global warming. He concludes that there are very few benefits from these steps.

American Progress Senior Fellow Joseph Romm argues that atmospheric CO2 has already reached an unacceptable level, and that urgent action is needed in the next few years. Fortunately, this action need not involve prohibitive costs. Indeed, many possible options for greenhouse gas abatement will result in economic benefits.

These changes are desperately needed, too, before global warming reaches a tipping point beyond which the carbon sequestered in permafrost is also released into the atmosphere, aggravating the problem. Should we fail to act, widespread desertification, massive species extinction, and other catastrophic events are predicted, even by authorities whom Jim Manzi also accepts.

Indur Goklany argues, in response to Jim Manzi and Joseph Romm, that solving the likely problems resulting from global warming will be both cheaper and more effective than any global response aimed at stabilizing or changing the climate itself. Harm reduction will also pay important dividends regardless of the degree of global warming, since it will include the development of new treatments for diseases, better flood protection, improved crops, and general economic advancements for the developing world. When taken together, these factors will help us to face any global warming scenario effectively, and they will also offer even larger benefits outside any considerations of climate.

Michael Shellenberger and Ted Nordhaus describe what they see as a significant political realignment: Both left and right, they claim, are converging on a state-sponsored and technology-based solution to global warming, one that will emphasize clean energy and/or carbon sequestration technologies. They argue that the debate about climate modeling is largely irrelevant and/or unproductive, because these technologies are generally agreed to be important in their own right and to have positive economic effects regardless of the degree of severity of global warming. They call on policymakers to embrace a large-scale, state-funded effort to achieve these breakthrough technologies and argue that state sponsorship for technological advancement is, historically speaking, the engine of much progress and innovation. This, they argue, is a reason to embrace the same approach with regard to global warming.

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